THE PRESS THURSDAY, JUNE 19, 1986. Australia’s export worries

Press, 19 June 1986, Page 20

THE PRESS THURSDAY, JUNE 19, 1986. Australia’s export worries

The air of crisis which has developed about the Australian economy has been caused mainly by sobering figures concerning Australia’s external trade. Australia is rich in resources compared with New Zealand, but these are bad times for trade in commodities. Low world prices for Australia’s main exports, and high levels of importing, have placed Australia in a position akin to that of New Zealand. The figure cited in the Australian Budget for the trade deficit was sAustlo.7 billion; it looks, instead, as if it will be nearer sAustl4 billion. The difference is being attributed to a mistake in calculating the effect of a weaker dollar on reducing imports. The forecast reduction was by 2 per cent; instead, there appears to have been an increase in imports of 4.2 per cent. Compounding the trade deficit problem is Australia’s foreign indebtedness and the consequent need to service the debt. In the middle of 1985, Australia’s foreign debt was sAusts9.3 billion. The Department of Trade estimates that it will increase in the current year to sAustBo billion. Servicing this debt will take the equivalent of 16 per cent of Australia’s exports. (In March, 1985, New Zealand had a total indebtedness of $24 billion, requiring 15.5 per cent of New Zealand’s earnings in goods and services to service it. The New Zealand figure includes repayment of debts and the payment of dividends to overseas investors.) Like New Zealand, Australia has had a fundamental weakness in the structure of its economy because it has relied on too narrow a base for its exports. The base has not been as narrow as New Zealand’s and the growth in export income from mining and energy has prevented Australia from depending almost entirely on agricultural exports. The drive to increase exports of manufactures in New Zealand during the late 1970 s and 1980 s has shifted some of New Zealand’s dependence away from the agricultural exports.

The growth in the export of manufactures has been slower in Australia. The Department of Trade made the point that manufactured goods accounted for 60 per cent of world trade, but that they account for only a small proportion of Australia’s exports. Australia’s exports of manufactured goods in the 1985-86 year are estimated to earn about sAust6.3 billion. Imports of manufactures will be worth about $29 billion. The appeal made by the Australian Prime Minister, Mr Hawke, on television last week was for a broadening of the export arid import-competing base. The Australian Government plans to launch a “Buy Australian” campaign. Ancient Greek poets appealed to the gods. Mr Hawke held before the Australian television public the excellence of the long-distance runner, Robert de Castella, the opera singer, Joan Sutherland, the designer of the yacht Australia 11, Ben Lexcen, and the skipper of Australia 11, John Bertrand. “We have hundreds of potential de Castellas, Sutherlands, Lexcens, and Bertrands out there in our manufacturing and service industries — applying the same principles we can get the same results,” Mr Hawke said. The emphasis being given to buying Australian might appear to have implications for New Zealand. Australia pays bounties to manufacturers. These were discussed by the Minister of Trade and Industry, Mr Caygill, in an address to the Wellington branch of the New Zealand Institute of International Affairs this week. If Australia increases these bounties, the effects on New Zealand manufacturers could be painful. New Zealand has a particular significance to Australia in trade: it is the largest export market for manufactured goods. Australia is likely to use the potential of the Closer Economic Relations agreement to develop more exports of manufactured goods. It is not likely to take any actions which would squeeze New Zealand out of the Australian market.